<p>I might be the voice of dissent but I actually don’t think aggressive saving for college helps in the long run if you are eligible for/ reliant on need-based financial aid. FAFSA and PROFILE take your assets into account, especially savings accounts, trust funds, etc that they see as being cash equivalent, and expect you to contribute a fairly hefty cut from it every year (something like 20%??). So to get the most need-based aid possible, you want the lowest EFC possible, and assets like savings will only hurt you. But for people who wouldn’t qualify for need-based aid anyway, you should save away!</p>
<p>I had a modest college trust fund set up by my grandparents when I was born and it completely screwed my EFC-- it was like half of what my parents made annually and would have sucked the trust fund dry almost immediately, leaving me with 3 more years to pay on my own (btw my parents did not contribute a dime to pay for my college education or living expenses, so it was especially frustrating that my tuition was tied to their income and assets until I turned 24… another way in which the system is exceedingly flawed). But then the Great Recession hit and my little college nest egg took a nose dive right about when I needed to use it, so it didn’t end up mattering either way. </p>
<p>When I obtained independent status, my EFC was reduced but I was suddenly eligible for 3x more in federal loan limits. My college expected I’d take out the full amount possible ($12k/year), so it didn’t really make a dent in what I was paying. They also practiced “gapping”, like most colleges, and expected me to pay significantly more (2x) than my EFC out of pocket in addition to the loans. The total was about the same as my State U. All this was including a “generous” merit aid award that covered ~30% of the tuition, but basically I was stuck paying the other 70% with no real help from the college. Merit aid can be really great if it’s a full-ride scholarship, but a lot of schools use it to sway students’ decisions (“I got a $12,000 scholarship, wow, this college is so nice and my ego feels great, let’s go there!”) and then leave them high and dry with regards to need-based or institutional aid.</p>
<p>My solution was to transfer into a more expensive liberal arts college that guarantees to meet 100% of financial need and caps federal loans limits at $16k total for 4 years (the typical amount). They gave me $35k+ in grants each year, plus state grants, work study, etc. They even calculate off-campus living expenses into the total amount covered by fin aid, so my senior year I got a check each semester for living expenses-! Sure, I still had to pay my EFC out of pocket but it was fairly manageable. The majority of my debt is from my first school, the second cost me about as much as community college would have plus ~$4k/year in loans. </p>
<p>So the moral of the story: Saving won’t necessarily help you out that much, merit aid can be deceiving, and a super expensive college might end up being cheaper than your state university. </p>
<p>Another suggestion for graduating debt-free: go to school outside of the US. Canada has much more reasonable tuition rates (especially in Quebec), even at the ‘international student’ rate. If you can get residency, it’s even cheaper. Several EU countries offer free tuition to EU residents; Sweden’s universities used to be completely free for anyone (of course you’d have to know Swedish!).</p>